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Final Rule: Automatic Data Processing Equipment and Services; Conditions for FFP - 1988

AT-88-01

Published: January 20, 1988
Information About:
State/Local Child Support Agencies
Topics:
Funding, Federal Financial Participation (FFP), State Systems, Cost Allocation
Types:
Policy, Action Transmittals (AT), Regulations

ACTION TRANSMITTAL

OCSE-AT-88-01

January 20, 1988

TO:STATE AGENCIES ADMINISTERING CHILD SUPPORT ENFORCEMENT PLANS APPROVED UNDER TITLE IV-D OF THE SOCIAL SECURITY ACT AND OTHER INTERESTED INDIVIDUALS

SUBJECT:Automatic Data Processing Equipment and Services; Conditions for Federal Financial Participation

ATTACHMENT:Attached are final regulations issued by the Department of Health and Human Services (HHS) that make the removal of the requirement for prior HHS approval of service agreements published in the Federal Register on December 18, 1986 (51 FR 54321) retroactive to the original effective date of the requirement. These regulations apply to various HHS public assistance programs including the Child Support Enforcement program under title IV-D of the Social Security Act.

REGULATION REFERENCE: 45 CFR Part 95, Subpart F

EFFECTIVE DATE: February 3, 1988

RELATED MATERIAL: OCSE-AT-87-02 dated January 15, 1987

INQUIRIES TO: OCSE Regional Representatives

_________________________

Wayne A. Stanton

Director

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of the Secretary

Office of Child Support Enforcement

Office of Human Development

Services

Health Care Financing Administration

Family Support Administration

45 CFR Part 95

Automatic Data Processing Equipment and Services; Conditions for

Financial Participation

AGENCY: Office of the Secretary, HHS, Office of Child Support Enforcement, Office of Human Development Services, Health Care Financing Administration, Family Support Administration.

ACTION: Final rule.

SUMMARY: This rule makes the removal of a requirement for prior HHS approval of service agreements retroactive to the original effective date of the requirement.

EFFECTIVE DATE: This rule is effective February 3, 1988.

FOR FURTHER INFORMATION CONTACT: Claire Johnson, (202) 245-0421.

SUPPLEMENTARY INFORMATION: 45 CFR 95.611(b)(2) of the Department's rules, published on September 29, 1978 (43 FR 44853), required prior Departmental approval of a service agreement under which other State or local agencies would provide data processing services to the State agency administering a public assistance program under titles I, IV-A, IV-B, IV-C, IV-D, X, XIV, XVI (AABD), XIX, or XX of the Social Security Act.

Final Rules published on December 18, 1986 (51 FR 45321)-

o Revised õ95.611(b)(2) to remove the service agreement prior approval requirement; and

o Added, to õ 95.621, a new paragraph (e), requiring the State agency to keep a copy of the service agreement on file for Federal review.

During the period from September 29, 1978 to January 19, 1987, when the Department required prior HHS approval of service agreements (that is prior to States incurring under them costs for which States would claim HHS financial participation), there were instances where States incurred costs, and claimed and received HHS financial participation in those costs without having first requested and received HHS prior approval. Thisoccurred because some States believed erroneously that prior approval was not a pre-condition for automatic data processing funding, based on the Department's practice of occasionally having retroactively approved automatic data processing acquisitions of merit. Because it believed it should not unfairly penalize these States, the Department sought to rectify this situation on January 27, 1986 by publishing an interim final rule (51 FR 3337), which established the circumstances under which the Department would waive the prior approval requirements contained in õ95.611. The Department intended that action to both reaffirm the principle of prior approval and to correct those situations where States had incurred costs, and claimed and received HHS financial participation for activities undertaken under service agreements for which the Department had not given its prior approval, but which met all other pertinent requirements of 45 CFR 95.601 et seq.

However, the Department has since learned that there still exist instances where States have incurred costs, most of which have been claimed and paid through HHS financial participation under unapproved service agreements which are not eligible for waiver of prior approval under the provisions established by the January 27, 1986 interim final regulation (51 FR 3337), and which predate the December 18, 1986 final regulation (51 FR 45321) eliminating the prior-approval requirement of service agreements after January 19, 1987.

Recognizing this situation, the Department has decided to permit Federal financial participation (FFP) for service agreements executed under the 1978 rule that would not otherwise be eligible for FFP solely because of the States' failure to obtain Federal approval prior to their execution.

In effect, this rule eliminates the requirement for prior approval of service agreements which meet all other pertinent requirements of 45 CFR 95.601 et seq. and other Federal requirements governing State expenditures for service agreements. Thus, this regulation would permit the payment of claims for FFP that would otherwise be subject to a disallowance because of a lack of prior approval.

The Department is taking this action because: (1) Service agreements are a legitimate cost of automatic data processing activities required by States to administer the Social Security Act public assistance programs; (2) the costs incurred under the unapproved service agreements, which are the subject of this final rule, have for the most part been claimed and paid by HHS through the normal process of claiming HHS grant funds; and (3) the justification specified in the December 18, 1986 final regulation (51 FR 45321), that the prior approval requirement of service agreements was duplicative of similar requirements by the Regional Office of Cost Allocation, also applies to the unapproved service agreements which are the subject of this final rule.

Waiver of Proposed Rulemaking

The regulations published on December 18, 1986 removed theprior HHS approval requirement for service agreements. This change was-

o Based on public comments responding to the NPRM that preceded the December 18, 1986 final rules: and

o Justified because, the prior HHS approval requirement for service agreements being duplicative of similar requirements imposed by the Regional Office of Cost Allocation, constituted an unnecessary additional paperwork burden and could delay ADP operations.

We find that publication of this regulation in proposed form would be unnecessary, and contrary to the public interest for the following reasons:

o The provisions of this rule are consistent with those of the December 18, 1986 final regulation (51 FR 45321) which eliminated the prior approval requirement for service agreements, so that the opportunity for public comment on the substance of this rule has already been provided. Additional public comment is therefore unnecessary.

o The justification for eliminating this requirement in the December 18, 1986 final regulation (51 FR 45323, 45325), i.e., that this prior approval requirement duplicates similar requirements of the Department's Regional Office of Cost Allocation, which is responsible for the review and approval of cost allocation proposals submitted by States for use in administration of various programs under the Social Security Act, also applies to the unapproved service agreements which are the subject of this final rule. It is therefore, unnecessary to seek additional public comment.

o In comments received from the public in response to the January 27, 1986 interim final rule (51 FR 3337) establishing circumstances under which the Department would waive the prior approval requirement, no commenters opposed the rule and some requested additional relief from the prior approval requirement. This rule will be consistent with that request. Therefore, we believe it would be necessary and contrary to the public interest to require additional comments.

We find, therefore, that good cause exists for dispensing with notice and opportunity for public comment.

Regulatory Impact Analysis

The Secretary has determined, in accordance with Executive Order 12291, that this rule does not constitute a major rule because it will not have an annual impact on the economy of $100 million or more, result in a major increase in costs or price for consumers, any industries, any governmental agencies or any geographic regions, or otherwise meet the thresholds of the Executive Order.

Regulatory Flexibility Analysis

Consistent with the Regulatory Flexibility Act (Pub. L 96-354), which requires the Federal Government to anticipate and reduce the impact of rules and paperwork requirements on smallbusinesses and other small entities, the Secretary certifies that this rule has no significant effect on a substantial number of small entities. Therefore, a regulatory flexibility analysis is not included.

Paperwork Reduction Act

The recordkeeping requirements contained in õ95.621 have been approved by the Office of Management and Budget under the Paperwork Reduction Act of 1980 and assigned approval number 0990-0058.

List of Subjects in 45 CFR Part 95

Claims, Computer technology, Grant programs-health, Grant programs, Social programs, Social Security.

(Catalog of Federal Domestic Assistance Program Numbers: 13.645, Child Welfare Services-State Grants; 13.658, Foster Care Maintenance; 13.659, Adoption Assistance; 13.783, Child Support Enforcement Program; 13.714, Medical Assistance Program; 13.780, Assistance Payments-Maintenance Assistance; 13.808, Assistance Payments-State and Local Training)

Dated: October 29, 1987.

Otis R. Bowen,

Secretary of Health and Human Services.

45 CFR Part 95, Subpart F is amended as set forth below:

PART 95 [AMENDED]

1. The authority citation for Part 95, Subpart F, is revised as follows:

Authority: Section 1102 of the Social Security Act, 42 U.S.C. 1302; 5 U.S.C. 301.

2. Section 95.621 is amended by revising paragraph (e) to read as follows:

õ95.621 ADP reviews.

* * * * *

(e) State Agency Maintenance of Service Agreements. (1) The State agency will maintain a copy of each service agreement in its files for Federal review.

(2) A State agency that did not obtain prior approval of a service agreement, as required by õ95.611(b)(2) as it was in effect from December 28, 1978 (unless a State chose to exercise the option to make it effective as early as September 29, 1978) through January 19, 1987, is eligible for FFP claimed forservices furnished by other State or local agencies under that agreement if: (i) The State agency has a copy of it in its files for Federal review; (ii) it meets the definition of a service agreement as it was defined in section 95.605 from December 28, 1978 through January 19, 1987; (iii) the claim conforms to the timely claim provisions of 45 CFR Part 95, Subpart A; and (iv) the service agreement was not previously disapproved by HHS.

[FR Doc. 87-29972 Filed 12-31-87; 8:45 am)

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